February 24, 2011

Uranium Spot Price Settles At US$68.75 P/Lb But Seen As A Short Term Market Pullback

Published on Thursday February 24 2011

Very likely we shall see this recent decline within the Uranium Spot Market as a temporary pullback. On analyzing the Chart below one can clearly see a price convergence almost touching the Bottom Bolinger, in addition to the rapid decline of the RSI to 41
*RSI Above 70 Overbought/Below 30 Oversold
Therefore I would strongly suggest a bounce from this level.

This Weeks Market Wrap

After a stellar start to the year, the uranium spot market took a major step backward last week. Ux Consulting said that the price fell US$3.50 a pound to US$68.75, while rival TradeTech said it was down US$4.25 a pound to US$68.50.

Either way, it is the worst one-week price drop since the financial crisis in 2008. But according to TD Newcrest analyst Greg Barnes, it is not a huge concern.

TradeTech said there was a “non-traditional” seller in the market offering 800,000 pounds of material. Mr. Barnes wrote that he understands the seller is Chinese. The Chinese want uranium to be processed in China itself, and the material that was sold was effectively “stranded” at a Western converter, Mr. Barnes said.

“Rather than have the uranium concentrate converted in the West, the Chinese sold it in favour of material that could be imported into China as uranium concentrate and processed domestically,” he wrote.
He does not think that the Chinese have suddenly taken a bearish view of the market. Rather, he believes the sale was more of “an adjustment of inventory positions.”
“It appears that once the Chinese material cleared the market, buying interest returned at the new, lower level,” he wrote.
The uranium spot market has been very busy this year. 

Ux Consulting reported that the beginning of 2011 has been the strongest start to a year since 2005. There have been 53 transactions covering nine million pounds of uranium.

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